Barry Minkow

Barry Minkow (born March 17 1967) is an American religious leader and ex-convict.

As a young teenager Minkow was a fraudulent entrepreneur who managed to present the front of a successful businessman for a number of years during the 1980s. His company, ZZZZ Best (pronounced "Zee Best") appeared to be an immensely successful carpet-cleaning company. The company's 1987 collapse cost investors an estimated $100 million. He was convicted of fraud and several other offenses and sentenced to 25 years in prison, but served only seven years. During his time in prison, Minkow became involved in Christian ministry, which continued after his probationary release from prison in April 1995.

Today he is senior pastor of the Community Bible Church[1] in San Diego, California, having renounced his felonious acts. Minkow is recognized as an expert on fraud, and speaks on the subject to university students and the business community in an effort to prevent fraud.

Beginnings of ZZZZ Best

Minkow was raised in a Jewish family in a modest house in Reseda, a neighborhood in the San Fernando Valley of Los Angeles. He attended and graduated from Grover Cleveland High School in Reseda. He learned his business manners from his mother's job as a telemarketer with a carpet cleaning company.

At the age of 16—while still in high school—Minkow started ZZZZ Best in his parents' garage with the help of an investor who specialized in usurious loans to businesses. He soon branched out into "insurance restoration" services as well as home carpet cleaning.

Minkow found the going difficult at first. For instance, two banks closed his account due to California state laws of the time which forbade minors from signing checks. He also found it difficult to cover basic expenses, such as payroll. Out of frustration, he was forced to obtain usurious loans from two other Los Angeles-area investors. He also resorted to check kiting, stealing and selling his grandmother's jewelry, staging break-ins at his offices, and running up fraudulent credit card charges. At one point, one of his original investors tried to foreclose against him and repossess his equipment. However, a court backed Minkow's claim that the investor's interest rate was unlawfully high, and forced him to accept a significantly reduced principal. This only bought him a temporary respite, and he was forced to turn to businessmen with ties to the Mafia to get financing. In order to justify the need for this new financing, he had Tom Padgett, an insurance claims adjuster, give him some letterhead from his company to make it look like ZZZZ Best was working large numbers of restoration contracts for Padgett's company.

Nonetheless, Minkow was able to expand his company and open additional offices across Southern California, becoming the largest carpet-cleaning company in the region. He instituted a policy of promoting entirely from within the company; all of his managers started out as carpet cleaners or telemarketers.

However, Minkow's company was little more than a front to attract investment for a Ponzi scheme. While ZZZZ Best's home carpet-cleaning business was very real, its insurance restoration business was virtually nonexistent. It generated a fraudulent paper trail to fool potential investors. He helped Padgett form "Interstate Appraisal Services," a separate company, to support this fraud.

Minkow raised money by factoring his accounts receivable for work under contract, as well as floating funds through several banks in an elaborate check kiting scheme. He hired reputable accountants and lawyers to boost his image.

Going public

In late 1985, one of Minkow's longtime friends suggested that becoming a public company would solve most of Minkow's cash shorts; up to that time the company had existed from payroll to payroll. Minkow liked the idea, seeing it as a way to fulfill his ambition of making ZZZZ Best "the General Motors of the carpet-cleaning industry.

ZZZZ Best officially went public in January 1986 when it merged with a Utah-based shell company, gaining a spot on NASDAQ. At the time, Minkow was the youngest person to take a company public in American financial history. He retained a 53 percent controlling interest in ZZZZ Best; at fifty cents a share, this made him an instant millionaire on paper.

Going public also offered Minkow an instant solution to covering up his fraudulent activities. Under securities law, he was not allowed to sell any of his personal shares until January 1988. At that time, however, he planned to sell a million of his shares to the public. He hoped that by then the company would have grown enough that he'd be able to pay everyone off once and for all and go completely legitimate.

Minkow launched a massive television advertising campaign featuring himself in a business suit, confidently extolling the superiority of ZZZZ Best. Minkow was presented as a business success story in magazines and TV shows. Los Angeles Mayor Tom Bradley declared a Barry Minkow Day. Minkow gave lectures at business schools, owned a Ferrari Testarossa sportscar, and bought a mansion in the wealthy Valley neighborhood of Woodland Hills.

In order to obtain more financing, Minkow was persuaded to have an investment bank raise $15 million of capital through an initial public offering of ZZZZ Best stock. When accountants wanted to inspect ZZZZ Best's operations, Minkow borrowed fake offices for a tour of "Interstate Appraisal Services" and used an incomplete building to present a fake restoration job. He used $2 million to complete the building in twenty days. The accountant who audited the company before it went public didn't visit the insurance restoration sites himself. The public offering closed in December, and Minkow became the youngest person to lead a company through an IPO in American financial history.

There were signs of problems, but investors chose to ignore them. The company's chief financial officer owned a florist business, and that company was accused of having stolen over $92,000 by charging flowers to customers' credit cards without authorization. Additionally, ZZZZ Best's four outside directors had no experience running a publicly-traded company. Short-sellers, including the Feshbach brothers, took positions betting that ZZZZ Best's stock would fall.

Magazines and TV shows did not bother to check his background. Investigations by the U.S. Securities and Exchange Commission, the FBI, two accounting firms and various individual investigators found nothing. Minkow bribed a security guard to give him access to a newly constructed building in Sacramento, California so that he could present it to his auditors as a wreck that ZZZZ Best had recently finished restoring.

Downfall

By February 1987, ZZZZ Best' stock was worth $18 (USD) a share on NASDAQ, valuing the company at more than $280 million. Minkow's stake was worth over $100 million. The company was now a 1,400-employee colossus with offices across California, Arizona and Nevada.

However, it was still facing severe cash shorts from paying investors for the nonexistent restoration projects. Minkow needed another cash infusion, and thought he had it when he heard that KeyServ, the authorized carpet cleaner for Sears, was up for sale by its British parent. Although it was double the size of ZZZZ Best, the two companies quickly agreed to a $25 million deal in which ZZZZ Best would be the surviving company. The merger would have made Minkow the president and chairman of the board of the largest independent carpet-cleaning company in the nation.

Then, almost as rapidly as it rose, ZZZZ Best came unraveled. Minkow had blamed the fraudulent credit card charges on unscrupulous subcontractors and another employee, and paid back most of the victims. However, one of the few people he didn't play back was a homemaker who had been overcharged a few hundred dollars. She never forgot what happened, and tracked down others who had been bilked by Minkow. The woman's diary became the basis of a Los Angeles Times article revealing that Minkow was responsible for running up $72,000 in fraudulent credit card charges in 1984 and 1985. The story, which ran only four days before Minkow was due to close on the KeyServ purchase, was written by a reporter who had done a glowing feature article on Minkow two years earlier. The revelations caused a small brokerage to short ZZZZ Best's stock, sending its price down 28%.

Within hours of the story breaking, ZZZZ Best's banks either called their loans or threatened to do so. Drexel Burnham Lambert, the firm that was raising the capital for the merger, postponed closing until it could reinvestigate the matter further. Later that day at a press conference, a reporter indicated that a restoration project in Sacramento not only didn't exist, but that ZZZZ Best didn't even have a contractor's license that was required for large-scale restoration work.

To calm nervous investors, Minkow issued a press release touting record profits and revenues--but did so without notifying Ernst & Whinney (now part of Ernst & Young), the firm responsible for auditing the company prior to the KeyServ deal. The press release also implied that Drexel had cleared ZZZZ Best of any wrongdoing. ZZZZ Best's stock briefly rebounded, but dropped again after Drexel pulled out of the deal.

The day after this bold press release, Ernst & Whinney discovered that Minkow had written several checks to support the validity of the nonexistent contracts. Many of them had been written to an associate who later informed the firm about the fraud. Minkow denied even knowing the individual, but shortly after the checks were discovered, Ernst & Whinney discovered that Minkow had cut two checks to him for an unrelated matter. When Minkow couldn't explain the checks, Ernst & Whinney resigned as ZZZZ Best's auditor, but did not inform the SEC of its suspicions until a month after it resigned.

In addition, members of the press had been researching the company, and communicating with short-sellers who had done their own research. These investigations indicated that most of the company's contracts didn't exist. Another Times story spurred FBI investigation of Minkow's link to the Genovese crime family and white separatist movements.

The final straw came on June 27, when an independent law firm ZZZZ Best retained to investigate the allegations of wrongdoing asked for the addresses to all of the company's restoration jobs. Minkow realized that he couldn't possibly come up with them, and resigned on July 2, citing "health reasons." Before leaving the company, he secretly cashed in $700,000 of his stock to retain a criminal lawyer, hire a private investigator and make some private investments.

Three days later, the company's new management sued Minkow and several of his colleagues for misappropriating $23 million of company funds, as well as diverting funds from the company by arranging for phony restoration contracts. Minkow's embezzlement had so depleted the company's funds that it was forced into bankruptcy, though the ZZZZ Best name was so tarnished by then it is unlikely it would have been able to stay in business in any case.

A week later, the Los Angeles Police Department raided Minkow's home and ZZZZ Best offices and uncovered evidence that ZZZZ Best was being used to launder money from the sale of narcotics. The LAPD believed that the phony restoration contracts were being used for the money-laundering scheme and to inflate ZZZZ Best's stock.

Distraught over the possibility of going to jail and losing everything, Minkow became a born-again Christian. His mother had become born-again several years before, and had told him that she'd prayed for ZZZZ Best's demise after he'd told her that he wanted to "buy" God.

The collapse of ZZZZ Best prompted an investigation by the House Energy and Commerce Committee.

Conviction and prison

Minkow and eleven other ZZZZ Best insiders were indicted by a Los Angeles federal grand jury in January 1988 on 54 counts of racketeering, securities fraud, embezzlement, mail fraud, tax evasion and bank fraud. The indictment accused Minkow of bilking ZZZZ Best's investors and lenders out of $50 million. It also accused Minkow of setting up dummy companies, writing phony invoices and conducting tours of purported restoration sites. Three additional counts were added in a superseding indictment.

While Minkow admitted to manipulating his company's stock, he portrayed himself as a victim of strong-arm tactics by the organized crime figures who fronted him money. Nonetheless, he was found guilty on all charges and sentenced to 25 years in prison and five years' probation. He was also ordered to pay $26 million in restitution, and was banned from ever serving as an officer or director of a public company again. In sentencing him, U.S. District Court Judge Dickran Tevrizian described Minkow as a man without a conscience. He also rejected Minkow's plea for a lighter sentence as "a joke" and "a slap on the wrist" for someone who had manipulated the financial system.

He served just under seven and a half years, most of them at Englewood Federal Prison in Jefferson County, Colorado. During his early prison stay in San Pedro, California before his trial, Minkow became involved in Christian ministry. He earned Bachelor of Arts and Master of Arts degrees in Church Ministries (with an emphasis on Theology and Apologetics) from Liberty University. In 1996 he earned a Master of Divinity degree from Liberty.

Release and religion

After Minkow's early release from prison in 1995, he went to work at the Church at Rocky Peak in Chatsworth, California as Director of the Bible Institute and Pastor of Evangelism.

Since 1997 he has served as the senior pastor of San Diego's Community Bible Church.

Minkow also holds an executive position at the Fraud Discovery Institute in San Diego, which he helped found. In this capacity, he posed as a potential investor in order to uncover an investment scheme run by pastor Steve O. Cooper of Nu-Way Christian Ministries Inc. of San Diego. Cooper and his wife had been promising investors returns of 3% a month; Minkow passed the information to authorities, and the NuWayCorp investment firm scheme was shut down by regulators in August 2005.^[1]^[2] He has similarly investigated Derek Turner's Turning International Ltd. scam in the Bahamas, Rainmaker Managed Living, MX Factors, and others.

Restitution

Tevrizian dismissed the original judgment on behalf of investors and lenders against Minkow was in 2002. His probation was also cut short as of the fall of 2002. Currently the former convict's outstanding monetary debt remains with Union Bank of California, with principal and interest totalling around $19 million (USD) as of 2004. Minkow pays up to 30% of his $68,500 yearly salary to the bank.^{[citation needed]} Additionally, it has been said that the great majority of his speaker's fees go to pay this debt.^{[citation needed]} Minkow and his wife Lisa live with two adopted Guatemalan children in north San Diego County, California.

Pastor Cooper has many notable accomplshments:

Gave up his 4 bedroom home to house men that were having a tough time getting started in life.

Was the visionary (17 years) to start the HeritageDayParade.org that is geared toward Community, Commerce and Christianity where the city comes together during Black History Month reaching out to all cultures and backgrounds.

2nd generation Pastor and the Father has pastored the same church for over 50 years and he has been married to my mother for 66 years.

Began Nu-Way Christian Ministries in 1993 in his livingroom with his wife and 2 children and now 6 churches have come out of it to date.

He has been honored and accomendated by notables like Sen. Steve Peace

Board of Supervisors as far back as 1990

Bob Filner Steve O Cooper Day from coucilman Tony Young and Bob Filner

The Channel 10 Leadership Award
Mayor Maureen O'Conner

Mayor Susan Golding Mayor Jery Sanders Gov. Swartzneger

President George W. Bush
United States Military ... Transient Unit
Honorary Doctorate

Just to name a few of his accmplishments.

And this is one that he is really proud... He married his high school sweetheart and they have been together for 33 years to whom 2 beautiful chilren were born.

Pastor Minkow I hope that this sheds a little light of the heart of Pastor Steve Cooper of Nu-Way Intl. Christan Ministies.

—Preceding unsigned comment added by 66.174.92.169 (talk) 17:51, 12 March 2008 (UTC)

Retrieved from "http://en.wikipedia.org/wiki/Talk:Barry_Minkow"

Miss Southeast San Diego ...Prilimenary to Del Mar Fairest of the Fair, Building self esteem of our youth Little Miss Hispanic

In efforts to bring the Christian Community together on Gospel Psalm 100 which is music and speaking from differnt denomenations were brought together by him.

Gave up his 4 bedroom home to house men that were having a tough time getting started in life.

Was the visionary (17 years) to start the HeritageDayParade.org that is geared toward Community, Commerce and Christianity where the city comes together during Black History Month reaching out to all cultures and backgrounds.

2nd generation Pastor and the Father has pastored the same church for over 50 years and he has been married to my mother for 66 years.

Began Nu-Way Christian Ministries in 1993 in his livingroom with his wife and 2 children and now 6 churches have come out of it to date.

He has been honored and accomendated by notables like Sen. Steve Peace Board of Supervisors as far back as 1990 Bob Filner Steve o Cooper Day from coucilman Tony Young and Bob Filner The Channel 10 Leadership Award Mayor Maureen O'Conner Mayor Susan Golding Mayor Jery Sanders Gov. Swartzneger President George W. Bush United States Military ... Transient Unit Honorary Doctorate

And this is one that he is really proud... He married his high school sweetheart and they have been together for 33 years to whom 2 beautiful chilren were born.

Pastor Minkow I hope that this sheds a little light of the heart of Pastor Steve Cooper of Nu-Way Intl. Christan Ministies —Preceding unsigned comment added by 66.174.92.169 (talk) 17:51, 12 March 2008 (UTC)